Moscow has reiterated plans to improve its energy efficiency by pledging huge
investments aimed at developing its power supply networks. However, the
economic viability of proposed capital-intensive solutions remains far from
certain.
Russia' energy efficiency challenges have recently become a matter of
high-level concern. On July 19, the government issued an order to make the
governmental commission on the fuel and energy sector responsible for energy
efficiency matters. The commission is headed by first Deputy Prime Minister
Igor Sechin, who had received an order from President Dmitry Medvedev, in March
2010, to oversee energy efficiency issues.
The authorities have voiced expectations that energy efficiency
projects could eventually bring significant rewards. Energy saving measures
would allow Russia to save up to 65 million tonnes of fuel per year, or some
15% of domestic energy consumption, according to Russian Energy Minister Sergei
Shmatko, who made such claims during a meeting with Russian energy executives
in Yekaterinburg on July 15.
However, executives warned that energy efficiency projects could prove very
costly. Nikolai Shvets, head of the country's power distribution grid holding
MRSK, told Shmatko that half the company's 2 million kilometers of power
transmission lines were worn out. The renovation of the grid, needed to reduce
power distribution grid losses, would require 2.8 trillion roubles (US$92
billion) over the next 10 years, Shvets said.
The authorities have long pledged to replace obsolete and wasteful Soviet-era
energy technologies and solutions by what officials describe as "energy
efficient" facilities. On July 3, Medvedev urged prioritizing energy saving
projects as an important factor in modernization efforts.
In November 2009, the government announced plans to spend 1.8 trillion roubles
from federal and local budgets to finance energy saving projects by 2020.
However, these projects would allow savings of up to 10 trillion roubles in
2010 to 2020, according to government planners.
The plans were supported by legislative initiatives, designed to promote energy
saving. In 2009, lawmakers adopted new legislation on energy saving and energy
efficiency, apparently designed to replace wasteful and outdated technologies.
The new energy efficiency law, effective from January 1, 2010, introduced tax
and other financial incentives to encourage energy saving projects.
Last year, Russian authorities also adopted a long-term blueprint entitled
"Russia's energy strategy through 2030" that stipulates 60 trillion roubles in
investments in the energy sector by 2030. Russia's energy strategy through
2030, adopted by the government in August 2009, envisaged the continued
increase of oil and gas production. Moreover, the blueprint targets cutting
power distribution grid losses from 12% this year down to 8% by 2030. The goal
was supposed to be achieved due to the use of advanced technologies and
know-how.
Meanwhile, officials apparently remain skeptical regarding renewable energy.
Any type of massive use of renewable energy is unlikely in Russia, Shmatko
announced in Yekaterinburg on July 15. These sources may provide no more than
4.5% of domestic energy consumption by 2015, he said.
The government's ambitious plans were apparently based on the projection that
the energy sector would become increasingly attractive to private investors.
According to the blueprint, up to 90% of the planned 60 trillion roubles in
investments in the energy sector by 2030 would come from private sources. In
2022-2030, the government anticipates more than $500 billion to be invested in
the electricity sector.
However, government planning has been slow to address the question as to how
energy facilities might attract huge inflows of new private investments. The
authorities previously hoped the sector's deregulation could serve to encourage
private investors.
However, the Kremlin has apparently backed down on earlier deregulation
pledges. On July 9, the Russian Duma, the lower house of parliament, adopted a
federal law aimed at continuing direct state regulation of electricity and
heating supply prices offered by Russian utility companies to domestic
consumers. According to the bill, prices would remain regulated beyond 2011,
following the expiry of the current law on the state regulation of electricity
and heating prices on January 1, 2011.
The country's energy blueprints appear to rely on assumptions that huge private
investments could become readily available to support governmental planning.
However, these assumptions, as well as the moves towards energy efficiency,
will inevitably face a reality check.
Prior to working as Moscow-based independent researcher and journalist, Dr Sergei
Blagov was a newswire reporter. He spent nearly seven years reporting
from Hanoi, Vietnam, between 1983 and 1997.
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